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How Cryptocurrencies Are Fueling Ransomware Attacks And Other Cybercrimes

Founder and Principal at Mosaic451, a bespoke cybersecurity service provider and consultancy.

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Ransomware has become one of the most popular headline-making cybercrimes due to its nearly instant and guaranteed payday. Attacks have seen exponential growth, increasing by 6,000% in 2016. And despite authorities imploring them not to do so, most ransomware victims do pay up, nearly always in the form of the cryptocurrency bitcoin.

Cryptocurrency Explained

A cryptocurrency is simply a digital or virtual currency that employs cryptography as an anti-counterfeiting measure. Unlike fiat currency -- which is issued by a central authority, is based on debts, and derives its value from people’s faith in the issuing government and the economy -- cryptocurrencies are “hard” money. They are not issued by a central authority, are not subject to government manipulation and do not represent debts; they are more like gold bars than dollar bills.

The first and most popular cryptocurrency is bitcoin, which was created in 2009 by an anonymous individual or group known as “Satoshi Nakamoto.” Interestingly, Satoshi Nakamoto didn’t set out to invent cryptocurrency; rather, the goal was to create a digital cash system where transactions could be validated without the need for a central entity, thus ensuring that transactions would be anonymous. The resulting technology, known as blockchain, birthed bitcoin and every cryptocurrency that came after it.

Because bitcoin enabled fast, global, secure and anonymous transactions, it immediately appealed to libertarians and other groups who were distrustful of governments, the stability of fiat currency or both, as well as early adopters and savvy investors looking for the next digital gold rush. It also proved alluring to cybercriminals. Bitcoin was the currency powering the notorious Silk Road -- an online black market where users could purchase drugs, illegal firearms, child pornography and even hire hit men.

Silk Road is gone, but Bitcoin has found another large, illicit market: ransomware.

From Suitcases Full Of Cash To Bitcoin Wallets

In the old days, collecting ransom money was a much riskier endeavor. It involved such methods as suitcases full of cash (containing bills that could be marked) and wire transfers (which could be tracked). Then the cash had to be laundered, which usually meant only large criminal organizations had the resources to collect and clean large sums of money.

Conversely, anyone can sign up for a bitcoin wallet in a matter of minutes, and neither a Bitcoin wallet nor the transactions it performs can be easily connected to a real-world identity. While converting the bitcoin into fiat currency involves transferring it into a bank account, which could then be tracked, criminals can get around this by first converting the bitcoin into some other digital currency or perhaps a number of them, thus obscuring the money trail. Further, Bitcoin has competition in the form of next-generation cryptocurrencies that promise even greater levels of anonymity, such as Monero.

Meanwhile, it has never been easier to become a hacker. Not too long ago, cybercriminals had to develop their own malware, which required coding skills and at least some knowledge of operating systems, networking and hardware. Now, easy-to-use “ransomware as a service” can be purchased cheaply on the Darknet, and at least one vendor offers customer support for users of its malware. Would-be hackers who don’t want to purchase off-the-shelf ransomware can hire black-hat coders for custom development. All of these services are bought and sold using -- you guessed it -- cryptocurrency.

New units of bitcoin, and other cryptocurrencies, are generated by a process known as mining, where cryptocurrency “miners” solve complex cryptography problems and are rewarded with cryptocurrency units. So that the integrity of the currency is not diluted, all cryptocurrencies have a limit on how many units can be mined. Bitcoin, for example, is capped at 21 million units, of which approximately 16 million have been mined.

These cryptography problems are so complex that they can only be calculated by machines. They also require a tremendous amount of processing power, more than most individuals have access to. Hackers have come up with a solution to this “problem”: a new form of malware called Adylkuzz, which takes advantage of the same Windows vulnerability as the WannaCry virus (and actually prevents the machine from simultaneously becoming infected with WannaCry, lest it interferes with Adylkuzz). Adylkuzz isn’t after user data; it’s looking to hijack processing power and put it to use mining units of the Monero cryptocurrency. Similar to the Mirai malware, which turned IoT units into “zombies,” Adylkuzz works quietly in the background. The only symptoms of an Adylkuzz infection are slow performance and loss of access to shared Windows resources.

Whether the growth of cybercrime, especially ransomware, would have been stunted had cryptocurrency never existed is a matter of debate. Its anonymity and ease of use have, at the very least, made it easier for online criminal activity to prosper. Calls to regulate bitcoin and other cryptocurrencies began in earnest during the Silk Road investigation. The WannaCry ransomware attacks have reignited demands that the government do something about the problem, and if Adylkuzz propagates, the calls will grow louder.

The problem is, what exactly can governments do? Part of the problem is that governments, like most members of the general public, don’t fully understand cryptocurrency. Most governments aren’t even certain how to define it. Cryptocurrency can be spent at a store, just like fiat currency, but unlike fiat currency, it is finite and can be traded, like a commodity. People do not hold onto dollar bills hoping they’ll increase in value. Many people purchase cryptocurrency as an investment, on which they hope to get a return.

In the meantime, the best defense against ransomware and cryptocurrency mining malware includes a comprehensive approach: ensuring that systems and software are up to date, performing regular secure cloud backups, and partnering with a managed security services provider (MSSP) to monitor enterprise networks, perform risk assessments and make recommendations specific to your organization’s data environment.